When I checked my e-mail one day last week there was a note from a family that I had recently been working with trying to find them a home. “Sorry Ken, we need to take a break from shopping for a home. The experience is just too stressful and keeping us awake at night.”
I was a little disappointed but not surprised. They were first-time buyers with a limited down payment. Despite some past credit issues, they had been pre-qualified by a local lender for a FHA loan. We had already made two unsuccessful offers on homes. They were understandingly disappointed and frustrated with the process. I had cautioned them early that finding a suitable home in their entry-level price range wasn’t going to be easy but if they would just follow my advice and work at the home buying process, they would eventually end up with a home.
Briefly I thought about calling them and applying a little sales pressure to change their mind. After all, I knew all the excuses that buyers have for not moving forward and the sales skills to overcome their reluctance. Although I had likely trained a thousand agents on “Overcoming Buyer’s Objections” I was my worst student. Either folks wanted to buy a home or not. These folks had decided not at this time and so I would give them space and follow up in a few weeks to see what’s up.
Buying a home and going through the loan process is right up there on the stress level just below death, divorce and job loss. But despite the mental anguish, millions of families go through that process each year. This last year has been especially stressful for buyers facing a limited selection of homes, multiple offers and increasing interest rates.
A new survey conducted by Trulia and Harris Interactive provides an interesting view as to how buyers see the housing market today. The survey identifies what’s keeping buyers awake at night. If you or someone you know has recently purchased a home, perhaps you can identify with these leading sleep disorders.
The most common worry among home buyers is that mortgage interest will go up before they buy. While there are some things in life we can control, interest rates are not one of them. Yes, interest rates are more likely to go up in the future than down but let’s get a grip and add a little prospective. Mortgage interest rates below 6 percent are of historical significance. Over the last 42 years, it has only been since late in 2004 that the interest rate for 30-year fixed loans has been less than 6 percent. Mortgage rates are predicted to increase but remain below 6 percent through 2015.
One in three buyers are losing sleep, worried they will not find the house they really like. True enough, there are not enough perfect houses ideally suited for every buyer. So what? Start somewhere. One of the advantages of owning versus renting is homeowners can customize their own home to their preferences and lifestyle. Often, settling for less than our expectations has its own rewards.
One-third of buyers are losing sleep worrying that prices will go up before they buy and one-quarter of survey respondents can’t sleep because they worry home prices will fall after they buy. These two groups of worriers should get together in a late night Internet chat room. Home prices will go up and down. In the long term, equity is built by paying down the mortgage with deflated dollars. Inflation increases the value of real estate and decreases the value of currency.
Not qualifying for a mortgage was cause for 30 percent of homebuyers to lie awake at night. The loan process is more complicated and costly than what it used to be back in the day when all that was required for a loan was a pulse. Today, income, asset and employment documentation is endlessly reviewed and updated. However, the initial pre-approval process is pretty quick. If a homebuyer doesn’t have a written loan approval they shouldn’t be shopping for a home. Borrowers will feel more comfortable with the loan process if they have a dialog going with a reputable local mortgage professional. This group of restless sleepers needs to get off the Internet constantly searching for the lowest rates. The Internet is great for information but lacks the personal assurances that only a personal friend in the mortgage business has to offer.
Twenty-seven percent of homebuyers worry about competing with other offers. Unfortunately for buyers, multiple offers are the new reality. Buyers need to make their best offer possible and be mentally prepared to move along to another home if their offer isn’t acceptable.
Often the stress that comes with buying a home can be avoided. Anxiety is created when we do not understand the process, or we are not mentally prepared or sufficiently motivated to enter the playing field. Some apprehension, however, is good. We are genetically inclined to be cautious of the unknown. But if buying a home is keeping you up at night, drink a glass of warm milk and call your agent in the morning.
Ken Calhoon is a real estate broker in El Dorado County. He can be reached at kencalhoon.com.